A good mortgage broker should be able to tell you ways to avoid PMI. In our case, we got a 80/15/5 mortgage. The benefit is that we needed only 5% down to get into the house. Both mortgages are at a fixed rate, with the 15% one at a higher rate. Interest on both mortgages is tax deductible (AFAIK PMI isn't). The downside(?) is that we can't take out a line of credit/home equity loan, but the upside is that the total bill is less than if we had financed 95% and put down 5%, and had to pay PMI.

Also, if you have PMI you might be able to make it go away early if you can demonstrate that you have the required equity in the house, from appreciation, for example.

There are other splits that can be done depending on your situation, and in some situations you may be better off going with the loan+PMI.